Shift in regional top markets
Home prices are still rising, but not as drastically as before. Some hot markets are even seeing a cooling. Could home prices be near the end of their upward trend, or are they simply changing gears?
National home prices increased by 5% annually in May, the same as the previous month, however the 10-City and 20-City Composite both slipped in annual increases, according to the S&P CoreLogic Case-Shiller Indices, formerly known as S&P/Case-Shiller Home Price Indices.
“Home prices continue to appreciate across the country,” said David Blitzer, S&P Dow Jones Indices index committee managing director and chairman. “Overall, housing is doing quite well.”
“In addition to strong prices, sales of existing homes reached the highest monthly level since 2007 as construction of new homes showed continuing gains,” Blitzer said. “The SCE Housing Expectations Survey published by the New York Federal Reserve Bankshows that consumers expect home prices to continue rising, though at a somewhat slower pace.”
The 10-City Composite increased annually by 4.4%, however that’s slightly less than April’s 4.7% increase. Similarly, the 20-City Composite increased annually by 5.2%, a slight decrease from April’s 5.4%.
“Today’s Case-Shiller data paints a picture of a fairly calm and consistent market that looks much the same today as it has for the past few months,” Zillow Chief Economist Svenja Gudell said. “But while the market does look pretty stable from 10,000 feet, a closer look reveals a number of imbalances that are keeping the heat on the housing market this summer.”
“Sellers are in the driver’s seat, as buyers contend with fierce competition and very fast-moving markets,” Gudell said. “Demand is sky high and the number of homes sold is rising, even as inventory of homes for sale keeps falling.”
Portland, Seattle and Denver were among the cities with the highest annual gains among the top 20 cities over each of the last four months.
Readers of HousingWire will not find this surprising, as a deeper look into a report from Black Knight yesterday showed that home prices are increasing more in the mountainous areas of the West and in the Pacific Northwest.
“Regional patterns seen in home prices are shifting,” Blitzer said. “Over the last year, the Pacific Northwest has been quite strong while prices in the previously strong spots of San Diego, San Francisco and Los Angeles saw more modest increases.”
“The two hottest areas during the housing boom were Florida and the Southwest,” he said. “Miami and Tampa have recovered in the last few months while Las Vegas and Phoenix remain weak. When home prices began to recover, New York and Washington saw steady price growth; now both are among the weakest areas in the country.”
In May, Portland increased the most 12.5% annually, followed by Seattle at 10.7% and Denver at 9.5%.
“Home buyers in coastal markets, particularly on the West Coast, are experiencing very different conditions than those in Middle America,” Gudell said. “The tough buyers’ market we’ve been experiencing shows few signs of letting up as we enter the dog days of August.”
Eight cities actually reported a greater home price increase for the year ending in May than for the year ending in April.
After seasonal adjustment, the National Index showed an increase of 0.2% monthly, while the 10-City composite and 20-City Composited posted losses of 0.2% and 0.1% respectively. Monthly, home prices in 12 cities increased, remained unchanged in two cities and decreased in six cities.
Unlike his fellow chief economist at Zillow, Trulia Chief Economist Ralph McLaughlin says this month’s Case-Shiller results show a stabilization in the housing market.
“The S&P CoreLogic Case-Shiller Home Price Indices Index suggests the US housing market is stabilizing as the rate of price gains flatten for the fourth straight month,” McLaughlin said. “Prices in San Francisco shows noticeable cooling, while the Pacific Northwest continues to lead the country in price appreciation.”
Click to Enlarge
(Source: S&P Dow Jones Indices & CoreLogic)